Corporate Profile and Background

Corporate Profile

With 13.7 million consumer units served by four distributors – Coelba (BA), Celpe (PE), Cosern (RN) and Elektro (SP/MS) – Neoenergia is responsible for supplying electric power to 34 million people, some 20% of the Brazilian population. Controlled by the Spanish Group Iberdrola, Neoenergia is an integrated energy company operating in the segments of Generation, Transmission, Distribution and Trading, with businesses in 16 Brazilian states, and a strong presence in the Northeast, one of the fastest growing regions in the country in terms of GDP and population. In the Generation segment, between assets in operation or under construction, the group has an installed capacity of 4,541 megawatts (MW). It is recognized as the most transparent company in Brazil according to the 2018 ranking of the NGO Transparency International.

Our concession area extends to almost 835 thousand square kilometers and covers about 1,000 municipalities. The distributors, Coelba, Celpe, Cosern and Elektro – comprised in the category Redes – Networks, participated with 92% of total Gross Revenue in the results of the 2Q18.

Our generation platform is based on a clean-source matrix, with a significant share of renewable resources, and enjoys long-term concessions as well as long-term trading agreements in the regulated market (CCEAR). We believe that the matrix diversity together with our presence in both the distribution and the trading segments allow us consistency in producing results and mitigating risks.

Founded in 1997, following the privatization of the distribution concessionaires in the States of Bahia (COELBA) and Rio Grande do Norte (COSERN), and having acquired CELPE in 2000, Neoenergia is one of the largest integrated companies in the electricity sector in Latin America.

Our growth has been essentially organic, driven by major investments in quality improvement, universalization of access to energy in our concession areas, and the development of Greenfield generation projects primarily from clean sources, in addition to transmission lines.

The merger of Elektro in August 2017 consolidated Neoenergia as an integrated electric power company in Latin America, a result of the combination of large and diversified generation and distribution platforms, now also present in the distribution segment in São Paulo, most developed state in Brazil.

We believe that the Brazilian electricity sector represents the greatest growth potential in Latin America, and one of the most attractive investment opportunities among emerging markets.

 

Background

The Company started investing in the energy distribution sector in 1997 with the purchase, at the privatization auction by the Guaraniana consortium, of COELBA (Companhia de Eletricidade do Estado da Bahia), the largest distribution company in the northeast.

Historico

1997
  • Purchase of COELBA (Companhia de Eletricidade do Estado da Bahia).
  • Purchase of COSERN (Companhia Energética do Rio Grande do Norte), both with a 30-year state concession.
1999
  • Grant of the concession for the use of public assets to exploit the hydroelectric plant Itapebi on the Jequitinhonha River (installed capacity 462 MW).
2000
  • Purchase of CELPE (Companhia Energética do Estado de Pernambuco), at a privatization auction, for the minimum tender price of R$1.8 billion.
  • The deal included a commitment to build a thermoelectric plant in the State, and a start was made on constructing UTE Termopernambuco (installed capacity 532 MW).
  • Construction of UTE Termoaçu started, a thermoelectric plant located in the State of Rio Grande do Norte in partnership with Petrobras (installed capacity 368 MW).
  • Creation of the trading company NC Energia.
2003
  • Purchase of 42% of the shares of Itapebi that previously belonged to COELBA.
  • Restructuring and creation of a holding company that was named Neoenergia.
  • Start of commercial operation of UTE Termopernambuco
2004
  • Restructuring and creation of a holding company. Name changed to Neoenergia.
  • Termopernambuco UTE starts commercial operations.
2005
  • Concession auction for the construction of UHE Baguari (installed capacity of 140 MW, 51% Neoenergia) and SHPP’s Goiandira (installed capacity – 27 MW) and Nova Aurora (installed capacity – 21 MW).
  • Incorporation of Afluente Geração e Transmissão de Energia Elétrica S.A. (installed capacity 18 MW) to meet deverticalization guidelines in the distribution segment pursuant to Law No. 10,848/2004, and take over the generation and transmission assets of COELBA.
2008
  • Commercial operation of UTE Termoaçu.
  • Concession auction for UHE Baixo Iguaçu (installed capacity 350 MW, 70% Neoenergia).
2009
  • Inauguration of SHPPs Pirapetinga and Pedra do Garrafão, and UHEs Baguari and Corumbá.
  • Authorization obtained for the construction, operation and maintenance of Narandiba Substation.
2010
  • Purchase of 10% interest in UHE Belo Monte (installed capacity 11,233 MW), on the Xingu River (PA).
  • Concession auction for construction and exploitation of UHE Teles Pires (installed capacity 1,819 MW, 51% Neoenergia).
  • 2nd alternative sources Auction: purchase of nine wind farms (installed capacity 258 MW, 50% Neoenergia)
  • Start of the construction of 10 wind farms, nine purchased at auction, and Caetité 1 at the ACL – Free Market (total installed capacity 30 MW, 50% Neoenergia).
  • Execution of the Concession Agreement of Afluente Transmissão de Energia Elétrica S.A. and the plants of Afluente Geração de Energia Elétrica S.A.
  • Start of commercial operations of SHPPs Sítio Grande, Goiandira and Nova Aurora.
  • Completion of construction works of UHE Dardanelos.
  • Execution of Purchase and Trading Agreement with Iberdrola for the acquisition of cogeneration companies Energyworks and Capuava Energy (91 MW).
2011
  • Narandiba substation start of operation.
  • Start of commercial operation of Dardanelos UHE.
  • Acquisition of the concession for constructing, operating and maintaining substation Extremoz II.
2012
  • Concession obtained for construction, operation and maintenance of Brumado II substation.
  • Execution of concession agreement for Baixo Iguaçu, by SPE Geração Céu Azul S.A., for a 35-year period, with the issue of installation license No. 17033, after a long environmental licensing process.
2013
  • Baixo Iguaçu works start.
  • Wind farms Mel and Arizona 1 start commercial operations.
  • Completion of works of wind farms Caetité 2 and 3, and Calango 1, 2, 3, 4 and 5 with the status of “fit for commercial operation” recognized by ANEEL.
  • ANEEL transmission auction 001/2013 with the purchase of batch G for the construction, operation and maintenance of a 500kV Transmission Line extending for approximately 196 km, with connection bays at substations Campina Grande III, in Paraiba and Ceará-Mirim II in Rio Grande do Norte.
  • Completion of the sale of UTE Termoaçu to Petrobras, with the transfer of a 23% equity interest to Neoenergia.
2014
  • Amendment to the shareholders’ agreement governing the partnership between Iberdrola and Neoenergia in FEB (Força Eólica do Brasil). The original parent company, Força Eólica do Brasil, underwent a spinoff from which three companies were formed. In addition to the original company, which remained under joint control, two others were formed, each under the control of one of the partners; Neoenergia became controlling shareholder of FEB I, the parent company of wind farms Caetité 1 and 2 and Calangos 1, 4 and 5. Thus, FEB 1 became a subsidiary of Neoenergia, which started to consolidate its accounts according to the global method of accounting.
  • Acquisition of six new wind farms, three of which in Rio Grande do Norte and three in Paraíba (installed capacity 178.5 MW, 50% Neoenergia).
  • Commercial operation and expansion of Brumado II Substation.
  • Commercial operation of Caetité 1, Caetité 2 and Caetité wind farms.
2015
  • Neoenergia completes the purchase of Iberdrola’s equity interest of 8.5% and 7.01% in COELBA and COSERN, respectively.
  • Extremoz II substation starts commercial operations.
  • Completion of construction of 4 UGs, recognized as “fit” by ANEEL. The first two starting to operate with the completion of the provisional transmission line at the end of the year.
2016
  • Transmission Line Potiguar Sul starts commercial operation.
  • UHE Teles Pires starts full commercial operation.
  • Five wind farms (Calango 1, 2, 3, 4 and 5) start commercial operation.
  • Calango 6 and Santana 1 and 2 start test operation.
  • Geração CIII S.A. purchases the shares issued by Energética Corumbá III S.A., which belonged to Strata Construções e Concessionárias Integradas S.A. and Energ Power S.A.
  • Neoenergia starts the process of selling to Contour all its equity interest in: (i) Afluente Geração de Energia Elétrica S.A.; (ii) Bahia SHPP I S.A.; (iii) Goiás Sul S.A.; (iv) Rio PCH S.A.; and (v) EnergyWorks do Brasil Ltda., with Capuava Energy Ltda.
2017
  • Completion of sale of an SHPP and Cogeneration assets to Contour Global do Brasil Participações Ltda., on March 17, 2017.
  • Merger of Elektro Holding S.A. in August.